3 Key Criteria Of A Business Development Plan For Boutique IT Service Firms

Do you know that in Kansas it’s illegal to shoot rabbits from motorboats?

And while, on the surface, this is bad news, the good news is that it’s a bad plan anyway, so whether or not it’s the law, it doesn’t make a dickybird of a difference.

I’ve mentioned this brain-boilingly brilliant fact not so much because I used to be a rabbit farmer, but rather because many boutique IT service firms’ business development plans are the equivalent of trying to shoot rabbits from a motorboat.

On one side of the equation, the plan itself looks mind-bogglingly brilliant.

On the other side of the equation, the target market looks good too.

But closer scrutiny reveals that the specific plan is about as effective as picking a lock with a spaghetti or even plain futile to “catch” the selected target market.

Good business development planning is about doing fewer but more effective tasks to achieve better results.

And this is the problem.

For many IT service firms, the basic premise is doing more of the same as before and hope for better results.

Yes, there are many methods to land new clients.

Some work really well and generate lots of mediocre clients.

Some others work equally well and generate a few very high-quality clients.

And some other methods are about as useful as emergency exit on a coffin.

But based on three fiendishly cunning questions, we can determine which plan is worth implementing and which one is an ordeal to get involved with:

1. Is it healthy? That is, is it based on magnetic attraction not on maniacal pursuit of your target market?

2. Can it be systematised to make it consistent, predictable and sustainable?

3. Can it be automated to empower vs. enslave sellers?

Question #1: Is Your Business Development Plan Healthy?

Is it based on magnetic attraction of the market not mindless pursuit of your target market?

When you run a healthy business development programme, you are positioned as a trusted, respected, recognised and sought-after industrial authority and not just another fungible vendor.

High-quality buyers seek you out and bring their opportunities to you.

That’s the attraction part.

But that can be misleading too.

Many moons ago, Ralph Waldo Emerson posited…

“If a man can make a better mousetrap than his neighbour… the world will make a beaten path to his door.”

And this is the Emersonian type business development: Create a service, do nothing to let people know about it but expect them flock to you and hire you.

But do you know that the original phrase came from American writer and philosopher, Elbert Hubbard…

“I trust a good deal to common fame, as we all must. If a man has good corn, or wood, or boards, or pigs, to sell, or can make better chairs or knives, crucibles or church organs, than anybody else, you will find a broad hard-beaten road to his house, though it be in the woods.”

Ah, Elbert talks about common fame.

It means you’re already widely known for your amazing mousetraps.

That changes everything.

You can also see why Hubbard can sell more mousetraps than Emerson. As the saying goes, the more you tell, the more you sell.

Emerson’s explanation is short and, well, inaccurate.

Remember this difference when you want to hire someone to write your firm a 150-word home page full of chest-beating and stock images.

Yes, your business development has to start somewhere. And it has to start with an action, so your target market can offer a reaction to it.

And if you don’t like the reaction, you have to tweak the action.

With this approach IT service firms can produce impressive profit per employee figures, the ultimate KPI of a professional service firm.

When firms run on “unhealthy” business development plans, positioned as easily replaceable vendors, they have to “hunt” down each client, very often by responding to cattle calls and running the idiotic RFP gauntlet.

This approach requires you to have a large group of “hunters” in your firm whose daily chore is to roam the land and hunt for new clients.

But…

There is another option to acquire new business.

And this leads us to the difference between sales copy and sales force.

Well, the difference is about the same as the difference between a cart with two horses and a Belaz-75710 Dump Truck, the world’s largest dump truck, made in Russia.

And even if you had 102 horses and a commensurately larger cart, still, all you would end up with is a huge bill from your hay supplier and your vet.

But your operation wouldn’t be any more effective.

But when you couple the 75710 with the Belaz-78250, the world’s largest front-end loader (22 tonnes, 11,5 m³ bucket), two people can move a few grains of dirt rather quickly.

And the same goes for sales copy vs. sales force.

Let’s say your firm sells its services through your website, and your website generates $1 million in annual sales. Of course, you have your off-line channels too.

This $1 million comes from a 1% conversion rate.

Then a copywriter tweaks the headline a bit, fiddles with the opening a tiny bit, replaces a few weak words and phrases.

Your conversion goes up to 2% and now your website is generating $2 million a year.

Since your web analytics is an open book about what to tweak and how, you can achieve further improvement. Something that would take years with a field sales force… if ever.

What’s happened?

Your copywriter just doubled your sales without adding one penny to your marketing, HR or buying any new technology.

Please note, here I’m talking about copy, not content. $20 blog posts and $5 social media posts don’t lead to high-margin projects because high-level decision-makers ignore them.

Question #2: Is Your Business Development Plan Consistent, Predictable And Sustainable?

Can your business development be systematised?

Systematisation is important for two reasons…

1. Consistency and predictability make it possible for you to make more accurate projections for the firm’s future performance. The ability to make better projections adds to the firm’s value and makes long-term planning more accurate.

2. Consistency and predictability make the firm’s brand stronger.

There are four criteria that help you to find out whether you’re looking at a system or just a random heap of bits and bobs…

1. Can you identify its parts?

2. Do the parts affect each other?

3. Put together, do the parts produce a combined effect different from the effect of each part?

4. Does the effect, the behaviour over time, consistent under various conditions?

Besides rendering great service, the other main aspect of a boutique IT service firm is client acquisition.

The difference is that rendering services is paid work, but business development is not. Well, not directly.

But business development has always been a paid work and paid much more highly tan service delivery.

For this reason, it often happens that people get so busy delivering services that they are reluctant to engage in client acquisition.

But, if through systematisation, you could predict and factor in how much time and effort it takes for your people to perform their fair share of business development, their reluctance levels would come down quite significantly.

For instance, the task of “writing an article on leadership” can be pretty daunting. After all, both “article” and “leadership” are broad terms.

But…

Based on your last five clients, and following these three subheadings, write an article on the leadership problem of “When CIOs wreak havoc in the server room”.

Using this approach, the firm’s articles can be consistent, including a tried and tested call for action at the end, depending on what action the writer wants the reader to take.

With this article template you have a system, so whoever writes an article, it carries the firm’s unique voice, tone and style, thus brand. Not to mention that it’s less overwhelming to answer eight questions in a few paragraphs than “writing an article”.

Question #3: Does The Business Development Plan Empower Or Enslave The Business?

Can it be automated?

Your business development should take the burden of manual labour off your shoulders, and shift it over to automated systems, giving you and your people more time and energy to work on strategic issues and service delivery.

Issues that can’t be automated as easily as the first 57–80% of the client acquisition process during which buyers are not yet ready to talk to sellers.

On the surface, one option is to hire more people to delegate the work to, but that only complicates management.

There is an exponential relationship between the number of team members and the effort to manage them.

I learnt this when I was studying for my horse-and-cart licence in the UK many years ago to become a hearse driver.

The ideal number of horses to pull a cart is four.

Mathematically expressed: (N * (N-1)) / 2, where N is the number of horses.

Management effort for a 4-horse team: (4 * 3) / 2 = 6

Management effort for a 5-horse team: (5 * 4) / 2 = 10

Adding one more horse to a 4-horse team gives you 25% increase in pulling power and a 66% increase in effort to manage them.

The same applies to teams too.

The bigger the team, the less its performance per person, but the more time, effort and money it takes to manage it.

See Price’s law. Which states that, in any team, the square root of the number of team members do 50% of the work.

So, in a team of 9, 3 people do 50% of the work, and in a team of 25, 5 people do 50% of the work.

But in a team of four, two people do 50% of the work and the other two the other 50%. Perfect balance.

By the way, this is why the ideal number of horses is four.

This is why you should work your people in teams of four. If the project is big, stretch the deadlines, but stay with the four-person team for the sake of effectiveness.

Remember, adding new people to your firm should be the very last resort of growth. In most cases, adding new people leads to your firm’s enlargement not its growth.

Recruit (NEVER hire) a new person (only one person at a time) if and only if your existing setup operates at its peak effectiveness and the next step of growth is really a new person.

So, if you don’t want to ruin your firm’s profitability by hiring more people, you can turn to automation. There are five good reasons to do that…

1. Many tactical aspects of business development, put it bluntly, are boring and repetitive. And boring tasks are best left to technology that doesn’t get bored and doesn’t make mistakes due to boredom.

2. During the initial stages of the buying cycle, your firm can build more trust in your market through automated consistency than through humanised inconsistency. Consistently arriving autoresponders are more trustworthy than haphazardly arriving manual emails.

3. Up to 57–80% deep into the buying cycle, buyers are more willing to “consume” and “digest” automatically arriving valuable information than to talk to salespeople.

4. To be nicely profitable, a boutique IT service firm has to find the optimal headcount to provide its services. That leads to maximum profit per employee. Both understaffing and over-staffing erodes profitability. Economists call it the economies of scale. So, the key is to have the minimum necessary number of people and automate whatever can be sensibly automated.

5. The fewer people your firm needs, without getting understaffed, the better people the firm can hire. People get exceptionally well paid, they do exceptionally good work and the firm becomes exceptionally profitable. And this becomes an upward vortex.

Summary

I believe people can start businesses without business plans, but absolutely need marketing plans.

Once the business is on the roll, due to good marketing, and generates revenue, firm leaders and their key people can sit down and develop their business plans to map out and document their firms’ long-term growth.

But once you start your business, you’d better start with business development.

By business development, I really mean marketing and sales.

Yes, as your firm is getting bigger and bigger, and more profitable too, I hope, business development can become quite complex, but I believe these three questions can set a good direction before we lose ourselves in the tactical details.

Let’s remember Sun Tzu’s words in Art of War…

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”

The three questions can help you to set your strategy and then you can design tactics to serve that strategy.

And if something goes drastically wrong and your plan falls flat on its face, you can always go back to Kansas to hunt rabbits from a motorboat. At least, you can try and have rabbit stew for dinner.